Pat O’Connor Orthopedic Trauma Devices Business Opportunity


OrthoXel was founded in June of 2014 on the back of the body of research that was completed in Cork Institute of Technology’s Medic Center We are an orthopaedic trauma company focused on the development & commercialization of intramedullary nails for the treatment of tibia and femoral fractures. When we incorporated OrthoXel we had a very clear perspective on how to productise the basic research from CIT. However, we needed resources and funding and what we’ve done is we have resourced or funded the company through private investors, Enterprise Ireland and Local Enterprise Office. Those funding sources have enabled us to develop the technologies, through the CE mark, US FDA approval and European Clinical Study. As an orthopaedic trauma company we operate in a very competitive market which is dominated by a number of orthopaedic multinationals, because of that, we know need a very clever innovative technology to compete and so we’ve set about developing a new standard of care for treatment of tibia and femoral fractures. We’ve built our foundations on rigorous technical developments, clinical regulatory work, with the objective of developing the best tibial and femoral nail products on the market, with accelerated healing and improved patient outcomes and this objective has been borne out by the results of our clinical study and the data analysis to date. OrthoXel is primarily a technology development company with significant skills in technology development and commercialization. We recognize that the most efficient route to market for us is to leverage sale channels of an established orthopaedic multinational we will spend the next 12 to 15 months completing our technical development & clinical activities on the tibial & femoral products to position ourselves for a commercial deal in 2020. You

Markets predict slow growth, not recession: Ed Lazear


ARE KICKING OFF WITH TOP STORY RALLYING MARKETS, AFTER A DISMAL DAY YESTERDAY ON TUESDAY, THE MARKETS THIS MORNING ARE UP BETTER THAN 200 POINTS, COMING BACK, FROM THAT BIG SELL-OFF YESTERDAY WEAKER THAN EXPECTED MANUFACTURING DATA SECTOR SHRINKINGH FIRST TIME SINCE 2016S BLAMING HEIGHTENED UNCERTAINTY IN GLOBALING MANUFACTURING TO HEIGHTENED TRADE TENSIONS WITH CHINA FORMER ECONOMIC ADVISORY TO HE GEORGE W. BUSH THANKS SO MUCH FOR BEING HERE.>>NICE TO BE WITH YOU.>>BACK-AND-FORTH EVERY DAY, WITH MARKETS, AS INVESTORS REACT, EVERY WORD COMING OUT OF CHINA OR U.S. HOW DO YOU SEE THINGS?>>WELL, YOU KNOW, IF YOU LOOK AT WHERE WE ARE RIGHT NOW, COMPARED TO WHERE WE WERE A YEAR AGO I MEAN THE REALITY IS THE NUMBERS ALMOST ALL THE NUMBERS ARE WEAKER TODAY THAN A YEAR AGO SO YOU KNOW, IT IS — IT IS NOT QUITE AS ROSY A SCENARIO AS IT WAS — IN 2017, BUT WE’RE NOT IN DISASTER SITUATION RIGHT NOW. WHAT THE MARKET IS BASICALLY TELLING US IS AND, BY THE WAY, WHEN I SAY THE MARKET THERE ARE A COUPLE MEASURES WHAT MARKET IS SEEKING PEOPLE HAVE BEEN TALKING ABOUT YIELD CURVE A WHOLE LOT PAST FEW WEEKS, BUT NIGS TO IT YIELD CURVE YOU SIMPLY WANT TO LOOK AT STOCK MARKET, THAT IS FORECASTING NOT RECESSION JUST FORECASTING SLOW GROWTH. RIGHT NOW IF YOU USE THE S&P 500 WHICH IS ONE THAT I USE, THAT IS THE BEST INDICATOR OF WHERE WE’RE GOING NEXT FOUR QUARTERS SHOWING SOMEWHERE AROUND ONE AND ONE HALF TO 2% GROWTH NOT RECESSION, BUT NOTE SPECTACULAR BREAKOUT GROWTH. WANT THE YIELD CURVE AGAIN, YOU KNOW SOMEWHAT MORE PROBLEMATIC, BUT — THAT IS SOMETHING THAT USUALLY FORECASTERS UP TO TWO YEARS IN ADVANCE NOT CLEAR TELLING US WE ARE IN IMMINENT DANGER.>>LOOK AT DOLLAR, TOUCHING THE HIGHEST LEVEL MORE THAN TWO YEARS CONSTANT GLOOMY OUBLT OUTLOOK ABOUT ECONOMY UNCERTAINTY OVER TRADE IS THIS CUTING INTO EARNINGS ECONOMIC GROWTH ONE MORE PRESSURE ON — ON OVERALL ECONOMIC ACTIVITY?>>WELL, I THINK IT IS, AND I THINK, ALL OF OF THESE THINGS ARE AGAIN LOOKING AT THINGS SLOWING DOWN SO REMEMBER WHAT IS A RECESSION MEAN 2 RECESSION SIMPLY MEANS WE’VE PASSED THE PEAK THE QUESTION IS ARE WE GOING TO HIT A PEAKS SOMETIME OVER THE NEXT TWO YEARS? AND THE CHANCES THAT WE ARE, ARE YOU KNOW PROBABLY 15 ARE YOU KNOW PROBABLY 50-50, WHAT YOU ARE BASICALLY SEEING SLOWING AS YOU GET CLOSE TO THE TOP OF THE PEAK YOU SEE THAT IN A NUMBER OF INDICATORS, LOOK AT LABOR MARKET LAST YEAR CREATING ABOUT 225,000 JOBS, NOW DOWN TO 150, 170 STILL NOT BAD STILL IN ON A RECOVERY PACE, BUT SLOWER THAN WE WERE LAST YEAR, LOOK AT INVESTMENT INVESTMENT HAS SLOWED LOOK AT MANUFACTURING, YOU HAVE BEEN MENTION THAT A GOOD BIT IN YOUR PROGRAM THIS MORNING, MANUFACTURING, HAS SLOWED, ONE OF THE THINGS THAT IS IMPORTANT TO RECOGNIZE, BY THE WAY, IS THAT MANUFACTURING RETAILING AND CONSTRUCTION ACCOUNT FOR 150% OF THE JOB LOSS WHEN YOU GO INTO RECESSION, SO IT IS IMPORTANT TO KEEP WATCHING THOSE SECTORS BECAUSE THEY DO FORETELL THE FUTURE.>>CENTRAL BANKS ACROSS THE WORLD ARE STIMULATE WE GO KNOW EUROPEAN CENTRAL BANK IN FAVOR OF A STIMULUS PACKAGE COULD TRUE RATE CUT NEW GUIDANCE ECB PRESIDENT TOLD US THAT THAT THEY ARE LOOKING FOR MORE STIMULUS, BOSTON FEDERAL RESERVE PRESIDENT ERIC SAID HE DOESN’T THINK AN INTEREST RATE CUT IS NEED, IN THE UNITED STATES, AT THE MOMENT SO WHEN YOU LOOK ACROSS THE WORLD YOU SEE ALL THESE A CENTRAL BANKS STIMULATING. YOU SEE THE 10 YEAR IN U.S. AT BELOW 1.5%, IT IS A BIG MONTH CENTRAL BANKS THIS MONTH WHAT SHOULD WE EXPECT WHAT IS THE IMPACT?>>WELL, YOU KNOW WHEN YOU LOOK AT — YOU MENTIONED THE 10-YEAR RATE SO LET’S THINK ABOUT THE YIELD CURVE FOR A MOMENT YOU BASICALLY HAVE TWO SIDES TO THE YIELD CURVE RIGHT YOU HAVE THE LONG-TERM RATES AND YOU HAVE THE SHORT-TERM RATES, AND WHAT THE LONG-TERM RATES GENERALLY INDICATE IS EXPECTATIONS ABOUT THE FUTURE, SO WHEN LONG-TERM RATES ARE LOW ESSENTIALLY WHAT THAT IS TELLING YOU IS THAT PEOPLE DON’T THINK THAT THE FUTURE IS QUITE AS ROSY AS IT WAS YOU KNOW, AS I SAID MAYBE A YEAR AGO. WHEN YOU LOOK AT SHORT END OF IT WHAT THAT IS TELLING YOU THAT IS THE FED IS IN A CON TRACK SHUNRY MODE IF YOU LOOK BACK TO REPRIEVE, PREVIOUS TWO RECESSIONS WHAT HAPPENED LONG-TERM RATES NOT LOW THEY WERE PRETTY HIGH BUT THE SHORT-TERM RATES EVEN HIGHER SO RIGHT NOW IN A WAIGS WHERE LONG-TERM RATES ARE LOW, IN ABSOLUTE TERMS BUT AS YOU POINTED OUT THEY ARE NOT LOW RELATIVE TO THE WORLD CAPITAL MARKETS 10 YEAR ONE 1/2% HERE LOOK WHERE IT IS IN GERMANY NEGATIVE .7%. MARIA: RIGHT.>>SO IN RELATIVE TERMS WE ARE STILL PRETTY HIGH ON THOSE LONG-TERM RATES SO THE QUESTION IS YOU KNOW WHERE SHOULD WE BE GOING FROM HERE INTERESTING THE FED IS HAVING THE DEBATE RIGHT NOW, AND NOT ALL PLAYERS ARE THE ONES THAT I’D PREDICTED ACTUALLY BEING ON THE DIFFERENT SIDES OF IT SO IT IS QUITE INTERESTING TO BE AN WATCHING THIS. MARIA: YOU ARE RIGHT A DIVISION BETWEEN FEDERAL RESERVE EVEN BILL DUDLEY FORMER PRESIDENT NEW YORK FED ANSWERING BACKLASH ON SCATHING OP-ED LAST UNIQUE WITH NEW ONE IN BLOOMBERG THIS MORNING HERE IS WHAT HE IS SAYING, WHAT I MEANT WHEN I SAID DON’T-ABLE TRUMP WRITES DUDLEY AS I SAW IT BINGES OF THE TRADE WAR PRESIDENT’S TAX ON FED THREATENED TO BUT CENTRAL BANK IN UNTENABLE POSITION PRESIDENT TRUMP SHIFTING RESPONSIBILITY FROM DOWNSIDE RISKS FROM TRIED WAR ON TO FED I THOUGHT AN IMPORTANT ISSUE WORTHS EXPLORING WRITES DAY GOT SO MUCH BACKLASH ON THAT OP-ED HE WROTE LAST WEEK. YOUR REACTION TO WHAT BILL DUDLEY IS TRYING TO SAY.>>WELL, YOU KNOW I MEAN IN TERMS OF HIS PRINCIPLE SITUATION PRIVATE INDIVIDUAL NOW HE CAN SAY WHAT HE WANTS. THE FED SHOULD NOT BE THINKING IN TERMS OF POLITICS CERTAINLY IN TERMS OF OF AFFECTING ELECTIONS WOULD BE TERRIBLE PRECEDENT. IF I AM CHAIRMAN RIGHT NOW LOOKING AT THE SITUATION, AND I AM SAYING YOU KNOW WHAT SHOULD WE BE DOING, THEY ARE BASICALLY TWO KINDS OF MISTAKES THAT THE FED CAN MAKE THE FIRST IS CUTTING RATES, AND THEN AFTER THE FACT WISH IT HADN’T OR OPPOSITE IS REFUSING TO CUT RATES THEN AFTER THE FACT WISH THAT YOU HAD IT IS PROBABLY THIS COULD THE SECOND ENDANGERING IS MORE PRONOUNCED THAN THE FIRST ONE DOWNSIDE ASSOCIATED WITH SECOND ONE IS PROBABLY MORE SIGNIFICANT IF I WERE CHAIRMAN POWELL I THINK THAT IS HOW WOULD I BE THINKING ABOUT IT TRADING OFF TWO KINDS OF MISTAKES THAT YOU CAN MAKE, AND THINKING ABOUT WHEN ONE IS GOING TO BE MORE DETRIMENTAL TO THE ECONOMY OBVIOUSLY, YOU DON’T WANT TO MAKE EITHER MISTAKE IF GOING ONE WAY OR THE OTHER MY GUESS IS THAT THEY ARE THBDZ TOWARDS BEING A LITTLE BIT MORE LENIENT RIGHT NOW AND THEY ARE NOT WORRIED ABOUT POLITICS OF THE ELECTION.>>WHERE IS THIS HEADEDED? YESTERDAY WE A HAD FACTORY DATA OBVIOUSLY, SHOWED MANUFACTURING IN FAIR AND ACCURATE TO SAY SHRANK FIRST TIME IN THREE YEARS THEN YOU’VE GOT CONSUMER TWO-THIRDS ECONOMIC GROWTH SEAMS DOING VERY WELL ASK CONSUMER SPENDING SENTIMENT IS UPSET HOW WOULD YOU CHARACTERIZE THINGS RIGHT NOW AND ARE YOU EXPECTING A RECESSION AT SOME POINT.>>WELL ALL RIGHT –>>IN YOUR TERMS NOT –>>KWLAE LET’S TAKE THAT PIECE BY PIECE YOU SAID CONSUMERS ARE SPENDING I THINK SPENDING BY THE CONSUMERS REFLECTS WHAT WE ARE SEEING IN LABOR MARKETS LABOR MARKETS STILL SLOWING, UNEMPLOYMENT IS VERY LOW. EMPLOYMENT IS RELATIVELY HIGH EVEN WAGE GROWTH LOOKS PRETTY GOOD, SO ALL OF THOSE THINGS FEED DIRECTLY INTO CONSUMER SPENDING AND I THINK THAT IS WHEN WE’RE SEEING. IF YOU ARE THINKING ABOUT THE FUTURE, THE NUMBERS THAT YOU TALKED ABOUT THIS MORNING, THE ISM, THEY ARE NOT THEY DON’T NECESSARILY PREDICT WHAT IS GOING ON, THEY ARE INDICATORS OF A SLOWDOWN, AND TO MY MIND, THE MOST IMPORTANT INDICATOR THAT I HAVE SEEN OVER THE PAST COUPLE OF QUARTZ, IS INVESTMENT SO WE HAD, YOU KNOW, A COUPLE OF VERY GOOD INVESTMENT QUARTERS IN 2017 NOT QUITE THERE RIGHT NOW IF I AM THIS COULD ABOUT THE FUTURE THOSE TO ME ARE THE MOST IMPORTANT INDICATORS NOW YOU SAID ARE WE GOING TO HAVE A RECESSION, AGAIN I GO BACK TO WHAT I SAID EARLIER WE KNOW WE’RE GOING TO HAVE A RECESSION AT SOME POINT BECAUSE RECESSION JUST MEANS WE HAVE PEAKED WE ARE PAST THE PEAK WE KNOW WE ARE GOING TO HAVE A RECESSION AT SOME POINT I DON’T THINK MARKETS ARE TELLING THAT RECESSION IS IMMINENT THE NEXT TWO TO THREE YEARS I WOULD SAY CERTAINLY 50%>>WE ARE ON YEAR 11 OF THIS EXPANSION I GET THAT, QUICK WE GOT JOB NUMBER ON FRIDAY A FED MEETING ON THE 18TH. THIS MONTH, WHAT ARE YOUR EXPECTATIONS FOR THE JOB NUMBER AND DO YOU THINK THE FED HE CUTS RATES? ON THE 8 ON THE 18TH?>>I AM TERRIBLE AT PREDICTING IF I HAVE TO GIVE A PREDICTION WOULD I SAY SOMEWHERE IN 150,000 RANGE ABOUT WHERE WE SHOULD BE RIGHT NOW. MARIA: YEAH, THAT IS PRETTY MUCH WHERE THE ECONOMISTS ARE 158.>>YEAH, YOU KNOW BUT WE’RE — WE’RE MAYBE SLIGHTLY WORSE THAN WEATHERMAN, BUT, YOU KNOW, I AM NOT SURE HOW WE ARE IN TERMS OF.>>WHAT ABOUT THE FED.>>IN TERMS OF CUTTING CUTTING RATES, YOU KNOW, I WOULD BE VERY SURPRISED IF THEY DON’T CUT AT THIS POINT. ALL THE NUMBERS SEAM TO BE MOVING IN THAT DIRECTION SO I WOULD AND THEY ARE GOING TO CUT. MARIA: ALL RIGHT. WE WILL SEE IF 25 BASE POINTS PRESIDENT TALKING ABOUT ONE POINT OVER TIME. ED GREAT TO SEE YOU.

Fox Business – Melissa Francis – Time To Buy The Market


IT IS ALWAYS ABOUT MONEY MELISSA: OUR TOP STORY TONIGHT, THERE IS NO STOPPING THE WALL STREET RALLY. THE DOW CLOSEDED AT A RECORD HIGH FOR THE 7th DAY IN A ROW AT 14,455. SO WHAT ARE YOU DOING ABOUT IT? WHERE IS YOUR MONEY RIGHT NOW? TODAY’S POWER PANEL IS HERE WITH WHAT THE AVERAGE INVESTOR SHOULD BE MAKING OF ALL THIS LANCE ROBERTS, CHIEF ECONOMISTND CEO OF STREET TALK ADVISORS. SPENCER PATTON, CHIEF INVESTMENT OFFICER AT STEEL VINE INVESTMENTS. YOU RECOGNINIZE JONATHAN HOENIG, HE IS PORTFOLIO MANAGER MANAGER AT CAPITALIST PIG.COM AND FOX NEWS CONTRIBUTOR. THANKS TO ALL THREE OF YOU FOR JOINING US. LANCE, LET ME START WITH YOU. THE AVERAGE PERSON IS WATCHING THIS AND HEARING RECORD, RECORD, RECORD. SAYING WHAT AM I MISSING? WHAT ARE THEY MISSING?>>WELL OBVIOUSLY THEY’RE MISSING THE MARKET GOING UP BUT THERE IS KIND OF THIS ASSUMPTION THAT THE AVERAGE INVESTOR HAS BEEN OUT OF THE MARKET THREE YEARS, FOUR YEARS NOW AND NOW THEY’RE JUST KIND OF WAKING UP. THAT IS NOT THE CASE. MOST PEOPLE THAT ARE INVESTED –. MELISSA: YOU DON’T THINK SO?>>NO, IT IS NOT. IF YOU LOOK AT LOT OF DATA, ONLY 20% OF THE AMERICANS ARE ACTIVELY INVOLVED IN THE MARKET ANYWAY. THE BULK OF THOSE ARE INVEED FOR THE MOST PART. THEY’RE IN THE MARKETS. THEY’RE PARTICIPATING AND, YOU KNOW THE ISSUE REALLY BECOMES THOUGH WE HAVE TO LOOK AT RISK HERE. WE’VE OBVIOUSLY GOT THE FED INDUCING MARKETS. 85 BILLION A MONTH. MELISSA: RIGHT.>>DRIVING THESE MARKET PRICES HIGHER. THAT’S FINE. NO PROBLEM WITH THAT. MARGIN DEBT IS BACK AT LEVELS WE HAVEN’T SEEN SINCE 2007. MELISSA: YEAH.>>YOU HAVE HIGH YIELD CREDIT, HIGH YIELD CREDIT YIELDS ARE ATHE LOWEST LEVEL ON RECORD. WHICH BASICALLY MEANS THE YIELD CHASE AND RISK IS DEFINITELY THERE. SO YOU JUST WANT TO BE MORE CAUTIOUS WHERE YOU GO TOO FROM HERE. MELISSA: J JONATHAN, I’M THINKING ONE IN FOUR AMERICANS WHO TAPPED INTO THEIR 401(k) TO TRY TO PAY THEIR BILLS OVER THIS PERIOD OF TIME. I’M ALSO THINKING ABOUT THE PEOPLE WHO STOPPED CONTRIBUTING TO THE 401(k) WHEN THEY SAW THE MARKET TANK BECSE THEY GOT NERVOUS ABOUT IT. THEY’RE WAKING BACK UP TO WHAT IS GOING ON AND SEEING THEY MISSED TH RIDE UP. WHAT WOULD YOU TELL THE PEOPLE DO NOW?>>GET OUT OF THE HABIT MAKING INVESTING ALL OR NONE DECISION. YOUR POINT SPEAKS TO THAT EXACTLY. GO BACK TO 2009, 2010. INVESTORS OBOUSLY BECAME VERY SCARED AND A LOT OF THOSE INDIVIDUAL VESTORS UNFORTUNATELY PULLED ALL THEIR MONEY OUT OF THE MARKET. WE’RE AT ALL-TIME HIGHS ON THE DOW. WE’RE STARTING TO SEE THAT TRICKLE IN. I DISAGREE SLIGHTLY WITH OUR GUEST. WE HAVEE SEEN ESPECIALLY FOUR OR FIVE YEARS, COME OUT STOCKS GO INTO BOND AND INTO GOLD. MELISSA: I AGREE.>>MARKET HAS BEEN UP NINE DAYS IN A ROW. I THINK THE TREND STILL CONTINUES. I SEE HIGHER PRICES FOR STOCKS DESPITE THE RUN WE’VE HAD. MELISSA: SPENCER DO YOU THINK THE RETAIL INVESTOR IS ON THE SIDELINE AND WHAT SHOULD THEY BE DOING?>>I THINK WE SEE MORE RETAIL INVESTORS IN BONDS SIGNIFICANTLY. AND THERE IS CHU ON THE SIDELINES. WHAT PEOPLE NEED TO DO IS WAKE UP THE FACT THEY HAVE LOST A LOT O OF PURCHASING POWER LAST FIVEEARS. GASOLINE IS $4 A GALLON WHERE IT WAS AT TWO. GOLD WAS $750 AN OUNCE. NOW IT IS AT 1500. THEY NEED TO GET INTO REAL ASSETS. BUY THINGS LIKE REAL ESTATE. GET INVESTED INTO AGRICULTURE. GET INTO THINGS THAT WILL ESERVE THE PURCHASING POWER. DO NOT BUY THE MARKET ONCE IT IS UP NINE CONSECUTIVE DAYS THE LONGEST IN 16 YES. YOU WILL WAKE UP AND REGRET IT IN THE MORNING. PLEASE RUN AND DON’T MAKE THAT MISTAKE AGAIN HERE. MELISSA: LANCE, IS THAT GOOD ADVICE? THAT IS A GOOD POINT. YOU’VE LOST A LOT OF PURCHASINGNG P POWER. THE FED IS JUST GOING TO KEEPEP DOING WHAT THEY’RE DOING. SO ITEMS IS A LIKE THAT TREND COULD CONTINUE. DO YOU AGREE WITH THAT? WHAT ADVICE WOULD YOU GIVE IN LIGHT OF THAT?>>I THINK IT IS GREAT. ACTUALLY I AGREE WITH BOTH OF YOUR GUESTS OVER THE LAST TWO POINTS. I CALL THIS THE TAYLOR SWIFT MARKET BECAUSE THEY TREAT THIS LIKE A BAD RELATIONSHIP. WHEN IT DOESN’T WORK OUT BAIL O AT WORST TIME AND TRY TO GET BACK IN AT THE TOP. MELISSA: YES.>>BUT THE REALITY I AGREE WITH BOTHINGS LOOK THE MARKETS ARE VERY EXTENDED HERE. THERE IS RISK. YOU WANT TO BUY O ON CORRECTIONS. AGAIN, AGREE WITH JONATHAN, YOU DON’T WANT TO GO ALL OUT OF THE MARKET OR ALL-IN. IT IS NEVER GOOD. YOU CAN NOT TIME THE MARKETS. IN RESPECT TO YOUR SECOND GUEST, STEVE IS ABSOLUTELY RIGHT, IT IS ABOUT ASSET ALLOCATION. STOCKS ARE A FINE PLACE TO BE WHEN ALL THE FUNDAMENTALS ARE IN PLACE BUT EARNINGS ARE DETERIORATING. RISK IS HIGH. AND PEOPLE ARE CHASING STOCKS BECAUSE THEY’RE GOING UP. BUT LOOK, THERE IS SOME GREAT PLACES TO PUT MONEY. BOND PRICES HAVE ACTUALLY DECLINED OVER LAST COUPLE MONTHS WHICH HAVE GIVEN GOOD OPPORTUNITIES IN THE BBB RATED SPACE. THERE IS GREAT OPPORTUNITY, GOLD HAD A GREAT DECLINE OVER LAST FEW MONTHS. VERY, VERY OVERSOLD. THIS IS THE MOST OVERSOLD GOLD HAS BEEN IN LAST THREE YEARS. THIS IS GOOD OPPORTUNITY. MELISSA: I WANT TO ASK EACH OF YOU IN REALLY PLAIN LANGUAGE. IF PEOPLE HAVE MONEY SITTING ON THE SIDINES RIGHT NOW AND THEY’RE TCHING THIS RECORD DAY AFTER DAY AFTER DAY, WOULD YOU ADD MONEY TO STOCKS RIGHT HERE? I’M GOING THROUGH EVERYONE. JOJONATHAN, WOULD YOU START FIRST. WOULD YOADD MONEY TO START HERE?>>ABSOLUTELY, MELISSA. THE BEST INDICATOR OF THE MARKET IS THE MARKET. SO I DON’T BELIEVE AS THE OTHER GUESTAS SAID, I DON’T BELIEVE YOYOU BUYUY ON DIPS, BUY ON CORRECTIONS. YOU NEVER KNOW IF THE CORRECTION IS BEGINNING OF SOMETHING MORE SUBSTANTIAL, SOMETHING MORE SERIOUS. I BELIEVE IN BUYING STRENGTH. RIGHT NOW, LOOK AT STOCKS, BOND AND GOLD UNQUESTIONABLY, STOCKS IS THE BEST ASSET CLASS TO HAVE YOUR MONEY?>>DON’T BUY NOW. YOU WILL REGRET IT IF YOU BUY AT PEAKS, YOU BUYY ON CORRECTIONS. THAT IS WHAT DATA IN THE PAST SHOWN. BUY WHEN THINGS ARE CHEAP. DON’T BUY AT THE VERY TOP. MELISSA: I’M THOROUGHLY CONFUSED. LANCE YOU WILL BE THE DEAL BREAKER, THE TIEBAKER. WHAT DO YOU THINK?>>LOOK THE BOTTOM LNE IS, THAT MARKETS ARE VERY OVERBOUGHT. THEY ARE GOING TO PULL BACK AT SOME POINT. MAYBE THIS SUMMER. BUY ON CORRECTIONS. BUY ON WEAKNESS. THAT IS WHEN YOU MAKE THE BEST OPPORTUNITY. BUYING NOW, YOU’RE GUARANTEED IN THE NEXT THREE TO FOU MONTHS VALUES WILL BE LOWER THAN THEY ARE TODAY. MELISSA: JONATHAN, YOU’RE ODD MAN OUT NOW. I’LL LET YOU HAVE THE LAST WORD TO MAKE YOUR CASE.>>I MEAN, IDEA OF BUYING ON CORRECTIONS, MELISSA, YOU GO BACK TO 2007. YOU WOULD HAVE BOUGHT ALL THE WAY DOWN TO A 50% CORRECTION IN THE DOW. I IN FACT DON’T SEE THAT NOW. THE MARKET MOVES IN TRENDS. THAT IS THE BEST INDICATOR WE HAVE. RIGHT NOW YES, OF COURSE THE MARKET WILL GO DOWN ONE DAY IN THE FUTURE. IT WILL NOT GO UP FOREVER. I THINK IT IS BEST ASSET CLASS YOU CAN HAVE. STOCKS ARE LIKE SUSHI. YOU DON’T WANT A BARGAIN. DON’T WANT THEM ON SALE. BUY QUALITY, BUY STRENGTH. TREND TEND TO PERSIST. MELISSA: WHAT YOU LEARN IS SOMETHING WE LEARN EVERY TIME THERE IS BIG STOCK MARKET CRASH LIKE WHAT HAPPENED IN ’08. THAT IF YOU GET OUT AT HUGE CRASH YOU’RE ALWAYS SORRY LATER SO IT COMES BACK.

Why WeWork’s Business Model Is Risky | WSJ


– [Spencer] WeWork’s IPO is
coming as soon as next month. – Investors might rightly be wondering if it’s a bridge to nowhere. – This is, obviously,
an unprofitable company. We’ve seen a number of these companies come to market this year
with actually mixed results. – A lot of numbers are swirling around, but if you really wanna understand
WeWork’s business model, look at this one, $47 billion. That’s how much the
company is on the hook for in lease obligations leading
up to its public offering. It says a lot about how the company works and why some investors
are eyeing the risks. (pleasant piano and orchestral music) You probably know WeWork,
which recently changed its name to The We Company, as an office space with a specific aesthetic. You know what we’re talking about. The glass walls, plants, cafes, mid-century-style furniture. WeWork’s basic business model
is to lease large spaces, transform them to look like this, and then rent them out to
individuals and companies at a higher price. – [Spokesman] Our software
finds the best buildings in the best locations.
(dramatic orchestral music) Before we even begin construction, we build full 3D models to make sure we’re creating environments
that allow members to thrive. – [Spencer] As of 2018,
the company operated more than 35 million square
feet of space globally, and it currently occupies 528 locations in 29 countries around the world. (dramatic orchestral music) – [Spokesman] Speed is important, because on average, we
open two new locations every single day.
(dramatic orchestral music) – To cover the costs of
the renovations and leases, WeWork charges individuals and companies through four different membership options. For one of the cheaper plans, a member can bring their laptop and sit in a common area
if space is available, and for the most expensive plan, companies can rent out full offices, suites, or entire floors. WeWork also offers a service
called Powered by We, full custom build-outs
for larger companies. So why are some analysts
and investors skeptical? Well, some are concerned
with those lease obligations. When WeWork signs a lease
on a building in the U.S., they commit to an average of 15 years, but WeWork’s members only commit
to an average of 15 months. WeWork’s obligations top $47.2 billion, but its customers have only signed leases on $3.4 billion worth of space. Recently, the company has started signing more long-term clients, but still, with 528 locations, that’s a
lot of time and space to fill. It’s unclear how much
space WeWork needs to fill to break even, but the
company’s occupancy rate fell from 84% to about 80%
in the final quarter of 2018. The company said the drop
was caused by expansion. New offices traditionally
take up to 18 months to fill, but it’s unclear what would happen if suddenly fewer
start-ups and freelancers were looking for workspace, which could happen in
an economic downturn. It’s also unclear what would happen if existing tenants started to default. One place investors are
looking for precedent is International Workplace
Group, formerly known as Regus, a Swiss company with a similar
business model to WeWork. During the economic
downturn in the early 2000s, IWG’s U.S. unit filed for bankruptcy as its revenue fell but long-term
leases remained in place. WeWork has said it’s
flexible business model would help keep it safe in a downturn. The company’s rapid expansion has helped it stay out
in front of competitors, but some investors are
concerned that could change. That’s because WeWork’s business
model is easy to replicate. The company has filed for
some industrial design and furniture patent protections, but anyone with enough cash can lease out industrial office space
and flip it, and they have. A New York-based rival, Knotel, hit an estimated $1 billion valuation following a recent round of funding, and in 2017, Blackstone
acquired a majority share of The Office Group, a flexible workplace provider in the U.K. Investors will have to decide if WeWork’s size and
flexibility are enough to protect it in a period
of economic uncertainty. (pleasant mallet percussion music)

How Rwanda is Becoming the Singapore of Africa


This video was made possible by Curiosity
Stream. Watch over 2,000 documentaries for free for
30 days by signing up at the link in the description. Africa is often viewed quite poorly on the
world stage. The continent holds plenty of violent, corrupt,
and unstable nations and the majority of world’s least developed countries, but Africa is big. There are 54 countries there and not all fall
into the generalizations of the continent as a whole. Perhaps most notably, Rwanda. One of the easiest ways to compare countries
is through their indicators and Rwanda’s are impressive. For every 100,000 residents, Rwanda has, on
average, only 2.5 murders per year. As a point of comparison, that’s lower than
India’s 3.2 or the United States’ 5.4. It’s even more impressive when looking at
the kind of neighborhood Rwanda is in. Uganda has 11.5, Tanzania has 7, Burundi has
6, and the Democratic Republic of the Congo has 13.6 murders per 100,000. In addition, Rwanda is ranked as the 48th
least corrupt country in the world. That’s not perfect, but on the continent,
only Botswana, a far richer country, ranks higher. The country also has a 67 year life expectancy,
tied for forth best in Africa, and only slightly below the world average. That 67 year number is believable, but what’s
truly unbelievable is that 25 years ago, the average Rwandan had a life expectancy of 28
years. 25 years ago, Rwanda was in the midst of one
of the most horrific genocides in history. In only 100 days, 800,000 Rwandans were murdered
in the midst of this ethnic conflict. The group primarily targeted, the Tutsi, saw
the loss of about 75% of its population. With time, though, the country emerged from
the other end, peace prevailed, and its indicators began their steady climb upwards to where
they are today. It is now the 15th fastest growing economy
in the world as its government has set out a clearly defined mission—they want to become
the Singapore of Africa. To understand what this means, though, you
have to understand what Singapore is. It’s easy to forget that east Asia was not
the highly developed, economically powerful place it is today 100 years ago. Many refer to the 1800’s as Britain’s
century, the 1900’s as America’s century, and the 2000’s as Asia’s century. It’s thought that we are currently in the
century where Asia will prevail and one of the countries driving that is Singapore. Singapore sits at the top of all the indicators—not
just for Asia, but the world. It’s the eighth safest, third richest, third
least corrupt, third longest living country in the world. 60 years ago, in 1960’s, Singapore’s economy
had a size of about $700 million. Today that number is $320 billion. In the last ten years alone its GDP has doubled. It went from a definitively third-world country
to a definitively first-world country in less than a lifetime. The country is intensely focused on being
the business hub for Asia. Of the world’s 20 largest companies, 15
have operations in Singapore. It’s tough to look at the results of Singapore’s
economic development without being impressed. They have done the nearly impossible. Some of the ways Singapore has achieved this
growth, though, has met some criticism. The way Singapore is run politically has been
described as, “paternalistic.” It’s not quite authoritarian, but some freedoms
are lacking. One of the few indicators that Singapore does
rank at the top of is the Democracy Index. It scores a 6.4 out of 10 which ranks it at
66th in the world and categorizes it as a, “flawed democracy.” The elements of this paternalism range from
small things like the country’s ban on chewing gum for cleanliness purposes to big things
like the limitations on freedom of speech, assembly, and the press. To this, proponents would say, “look at
the results.” The country has succeeded economically based
off the trade that seemingly more and more countries are embracing, “liberty for prosperity.” Rwanda has been paying attention. Paul Kagame, its president, declared that
mission to turn the country into, “the Singapore of Africa,” and in many ways, it’s already
well on its way. Arguing that Rwanda is authoritarian is easy. On the same democracy indicator where Singapore
is categorized as a, “flawed democracy,” Rwanda earns a score of 3.4 out of 10 and
the categorization of, “authoritarian.” Paul Kagame was first elected in 2003, then
again in 2010, then again in 2017 with 98.8% of the vote. The US Department of State, though, described
that third election as having some, “irregularities.” That also came after a constitutional amendment
lifting term limits to let Kagame take power again. He is clearly well-liked and impressive. He began his career in the military, played
a part in toppling the oppressive governments of Uganda, Rwanda, and the DRC, and has been
described as, “perhaps the most successful general alive.” He is by all accounts a military genius and
since his fighting days he has risen Rwanda from chaos into peace and prosperity but as
a political leader, he himself is still oppressive. Just like Singapore, there are severe limitations
on the freedom of speech, assembly, and the press. There are even accusations of Kagame supporting
or arranging the assassination of his political opponents. Looking at the ends, though, there are clearly
more parallels with Singapore. Singapore’s success as a business hub is
can be attributed to three factors: geographic centrality, political stability, and ease
of doing business. As part of Kagame’s mission, Rwanda is working
to improve these same three factors. For the first factor, Singapore’s sits as
a central point in the world. Within an eight hour flight one can get to
the major business hubs of the middle east in the UAE and Qatar, all of India, all of
east Asia’s major business hubs, and all of Australia. Meanwhile, Rwanda sits only 600 miles or 950
kilometers from the geographic center of Africa. It is about as central as you can get on the
enormous continent. For both countries, though, geographic centrality
means nothing unless you can actually get to them. One of Singapore’s largest companies is
Singapore airlines—often considered one of the best if not the best airline in the
world. Thanks to this airline, one can get from Singapore
to five different continents in a matter of hours. It’s easy to underestimate the importance
of having a globally competitive airline to establish a city as a business hub. It’s safe to say that other business hubs,
such as Dubai and Doha, would not be as influential as they are today without their airlines. Rwanda has clearly noticed this. Their national airline, Rwandair, which is
government owned, has grown from a tiny operation with a few regional jets to a significant,
intercontinental airline operating brand new planes. They now fly all around Africa, to Dubai,
Brussels, and London and have even announced plans to start one-stop service to both Guangzhou,
China and New York. While the airline is not yet nearly at the
level of some larger players on the continent like Ethiopian Airlines and South Africa Airways,
it’s serving its job effectively of connecting Rwanda to the world. The second factor to Singapore’s economic
success is political stability. The World Bank rates countries in terms of,
“political stability and absence of violence and terrorism,” and for this, Singapore,
unsurprisingly, comes up in the 99th percentile—better than almost any country in the world. This is a big reason why a CEO might choose
to set up their Asian hub in Singapore over Hong Kong, for example, which only scores
in the 75th percentile for political stability and is trending downwards. They want to operate in a place that they
know won’t change quickly on a political level since there are inherent costs involved
with a changing external environment. Rwanda sits at the 48th percentile for this
political stability indicator, well in the middle of the pack. This isn’t phenomenal but, compared to the
sub-Saharan average of 31, it’s doing alright. It’s a contentious issue whether elements
of authoritarianism promote or impede political stability. In Rwanda’s case, with so few years under
the current form of government, it’s tough to know if the country really is stable or
not. Rwanda is now, by many accounts, a police
state. There are random checkpoints all around the
country and strict security at most buildings in Kigali, the capital. Kigali is now one of the cleanest cities in
Africa, let alone the world, partially due to a ban on single-use plastics and plastic
bags but also because all able-bodied members of the population are required to participate
in a community cleaning day on the last Saturday of each month. According to one report, there’s even widespread
unlawful detention of what are described as, “undesirables,” on the streets. The test of whether this country is truly
stable or rather in a state of temporary fear-based obedience might not have yet come. Rwanda has not experienced a transition of
power since 2000 and nobody really knows whether the country can continue on the right path
after Kagame leaves. He himself even said that if he had not groomed
a successor by 2017, “It means that I have not created capacity for a post-me Rwanda. I see this as a personal failure.” It’s now well past 2017 and Kagame is still
in power with no signs of leaving. Regardless of the reasons, though, for Rwanda’s
current political stability, it’s sure that businesses like it. It’s one of the top factors they look at
when deciding which countries to operate in. The third factor that led to Singapore’s
business success, ease of doing business, is perhaps the most important one and it’s
also the one at which Rwanda most excels. This is a broad factor but it’s one that
the World Banks tracks with a well known indicator—the Ease of Doing Business Index. This looks at ten factors—ease of starting
a business, dealing with construction permits, getting electricity, registering property,
getting credit, protecting minority investors, paying taxes, trading across borders, enforcing
contracts, and resolving insolvency. Singapore ranks as number two in the world
behind New Zealand and is followed up by Denmark, Hong Kong, and South Korea. Rwanda, meanwhile, scores as the 29th. This is an impressive score by itself but
it is incredibly impressive when considering how the rest of the continent ranks up. Rwanda is by far the highest ranked among
mainland African nations. The nearest trailing African nation is Morocco
at number sixty and plenty of highly developed countries like the Netherlands, Switzerland,
and Japan rank lower than Rwanda. To achieve this Rwanda has made plenty of
economic and legislative reforms to foster the business-friendly environment. They’ve also been focusing on building both
soft and hard infrastructure. The government, in collaboration with private
investors, built an enormous $300 million convention center along with a five star Radisson
Blu hotel to attract the convention market in addition to less flashy infrastructure
projects building roads and airports. Overall, Rwanda is on the hunt for international
investment in the country and so far, that’s paid off. In 2005, $10.5 million were invested from
abroad in Rwanda. In 2017, that number was $293 million. Clearly a lot is working in Rwanda. It’s safe, clean, and growing economically. What more could a country want? Well, there are serious questions from abroad
on whether Rwanda’s growth is ethical, replicable, sustainable, and even real. The way Rwanda has achieved its current stability
and growth have some external observers condemning it. Appearances of Rwanda can also be deceiving. It is still one of the poorest countries in
the world with the average resident earning only $750 a year. Some question whether the country should be
spending so much on its airline, its infrastructure, and its capital when so many in the country
are so poor. Some question whether the country is growing
for its middle and upper class while leaving its rural poor behind. It’s no surprise, though, that many of the
countries neighbors, curbed by violence and poverty, have pondered whether they should
be replicating the ways of Kagame. External observers have given mixed answers
to that question. Some believe that the the current authoritarian
policies will let dissent bottle up and eventually explode. They worry that the country will erupt into
violence again. Some say that the current regime is solely
focused on making things seem like they’re improving through climbing up the indicators
without making real, rational change. There are even some accusations that Rwandan
GDP growth figures might be inflated or otherwise manipulated. It’s sure that Rwanda has been growing enormously,
but is it really this much? There is no one recipe for economic growth. The fact that the United States became the
superpower of the 20th century and China is becoming the superpower of the 21st century
proves that more than anything. Democratic states grow and autocratic states
grow—they might grow in different ways, but there are success stories on both ends
of the spectrum. What external observers have so much trouble
answering is the means to the end question. Should Rwanda’s growth be lauded given how
it is achieved? Can you tolerate some bad in exchange for
much good? In the end, Rwanda is the country of Rwandans
and they are the only ones that matter with these questions. If Rwanda is truly working for all Rwandan’s,
then Rwanda is working. There are a lot of, “ifs,” but if Rwanda’s
growth is sustainable and if Rwanda’s politics are stable and if Rwanda’s investments pay
off and if businesses pay attention to Rwanda, there is a very good chance that the country
is well on it’s way to becoming the Singapore of Africa. If you’re interesting in learning more about
Singapore, there’s a fascinating documentary on CuriosityStream about how the country is
dealing with the problem of having a huge, growing, and aging population in its tiny
borders. It’s a great watch and one of more than
2,000 documentaries that you can watch on CuriosityStream. With them, you can watch these docs on almost
every platform: Roku, Android, iOS, Chromecast, Apple TV, desktop, and plenty more. If you like Wendover Productions, you’re
almost certain to be a lover of documentaries. Unlimited access is a reasonable $2.99 per
month but what’s best is that you can get started watching on CuriosityStream for free
for thirty days by signing up at CuriosityStream.com/Wendover and using the code, “Wendover,” at checkout.

Where are REITs in the investment spectrum?


[Music] when you look at the investment spectrum Reid said somewhere between equities and fixed income like fixed income they offer a consistent dividend return to investors MVD Reid pays a consistent dividend semi-annually REITs also offer investors potential access to capital appreciation on the assets as well as a return on their shares within the spectrum REITs offer investors the opportunity to further diversify their investment portfolios [Music] you

Vinod Khosla, MBA ’80: Failure does not matter. Success matters.


[MUSIC] [APPLAUSE]
>>Hello, everybody.>>Leonard, thank you for
being here today. Welcome back to the GSV.>>It’s always fun to be here. It’s a lot nicer than when I was here. [LAUGH]
>>Yes, I’ve been hearing that quite a bit today,
given the previous here. I, I’m thrilled to be
having this conversation. I was told that you scheduled
your time in 15 minute slots. So we are taking up four
of those slots right now. So, I’ll get right to it. I have a few questions here,
focusing on three things. Your leadership and management journey,
your thoughts of investing and entrepreneurship and then a few questions
on your personal life and legacy. After that, we’ll take a few questions
from audience and from Twitter. As Dean Saloner mentioned,
you were the founder and the first CEO at Sun Microsystems. About a year after you had started, you found out that Sun Microsystems was
gonna be shut out from a key thing. When you heard this, you got on a flight. Got to the customer’s lobby and made phone calls refusing to leave
until you met with the team. Where does this perseverance and
conviction come from?>>Well so, I have a philosophy in life. Whatever I believe, I should make happen. It’s that simple. And if a customer’s making a mistake,
[LAUGH] the customer isn’t always right. Trust me. [LAUGH] And if you want to do great
products, don’t listen to your customers, by the way. Lots of bad lessons in business
school I used to give a talk in the 80s on why not to listen
to your customers and maybe somebody will ask me a question
that story is in fact true. There was a signed contract
with a competitor, I stayed in the lobby all day
at 6 o’clock in the evening and I’d taken a red eye out and
I parked in the lobby. I met with the CEO of the company,
mostly, because he wanted me to go away. By 9 o’clock, he had I’d convinced him to
meet me in Chicago with his team the next day, because he didn’t wanna
be seen negotiating with us. The following morning,
the day after at 5 a.m. We signed a handwritten contract,
because I wouldn’t let him leave.>>Oh.
>>This was the CEO for big East Coast company, Computer Vision. We signed a handwritten contract and
life was good. The point is if you
actually believe something, you try your best to make it happen. It doesn’t always happen, but
it happens most of the time. Most of the business school
entry story is also true. I actually learned that
somebody had dropped out. That’s why I showed up and one of the nice
ladies in the business school office, put me in her living room to her husband’s
chagrin and she was real nice to me. But things do workout if you persist. Not always, but I like to say,
failure does not matter, it’s success that matters. And nobody remembers what you failed at. So, everybody remembers Sun. Does anybody know a company I
started before Sun that McNealy and I started together? Any hands?>>I do, but
I’ve been researching you for awhile now. [LAUGH]
>>What do you think the company is?>>Was it Data Dump? Or was it?
>>Yes. There was a company called Data Dump,
we started and go funded three months before Sun. Didn’t workout. We started both roughly together, but my point is people don’t
remember your failures. And I like to say my willingness to fail
is what gives me the ability to succeed. I find most people are so
afraid of failing, they don’t try and do the things that would
be important enough to do. Anything worth doing is hard an so.>>You’ve spoken in the past about the
importance of failure or the lack of it. You started your first
company at age 20 in Delhi, which did not work out as expected.>>Well, I didn’t actually get started.>>Huh.>>They told me,
it’d be seven years to get a phone line.>>How did you react to that? [LAUGH]
>>Honest to goodness. You know, I was 19 or 20 and they told me, it would be a 7 year waiting
list to get a land line. I, I, I sort of picked up and
went to Carnegie Mellon. [LAUGH]
>>How was that like, the move to the US?>>You know, look, it, it was easy. I wanted to be in Silicon Valley,
I knew I’d get here. I had no way to pay for it, so I had to figure out how to
get somebody to pay for it. In the end, the Biomedical Engineering
Department at CMU agreed to pay for it, so I went there. And I was very impressed
in biomedical engineering. So, I did that and
then applied immediately to Stanford and you heard the rest of the story. They turned me down a couple of times,
but, you know, the funny thing is with
enough persistence, most things that seem
impossible become possible. I’m always amazed at how often
you can turn things around and people take no for an answer too easily. You know, it’s whether you’re trying
to achieve a goal like get into business school or my,
my green card was the same way. I left the job that had sponsored me,
but I still got my green card, even though no lawyer would take me. I became my own lawyer. Got my green card without working for,
while I was in business school. [LAUGH] And I did it, perfectly, legally. I, my strategy there was if I
couldn’t convince immigration, I’d confuse them and I did. [LAUGH] And they gave me my green card. [LAUGH]
>>Well, you know, I, I just wanna ask you,
what are some, some of the perhaps, the early
influences that made you this way? This high perseverance,
high conviction person.>>Well I, I was sort of always this way. I didn’t grow up in this environment, nobody around my dad was in
the Indian arm since he was 16. So he joined the ranks of
the Indian Army in, when he was 16, got shipped off to Egypt to fight for
the British. And so,
I grew up in a very different environment. But I always had this view that if
I determined something was right, I was gonna make it happen. And this comes to, since one of
the focuses of this lecture is leadership. I am amazed at how few
people have a belief system. What do they actually believe in? I and, and, yeah,
it’s okay to offend you guys. [LAUGH] 90% of you will do what’s expected
of you as opposed to what you wanna do. And, you know, I even, when I come to
an event like this say, why am I here? Why would I even bother to take
an hour of my valuable time? [LAUGH] no, it’s true. I, I, I have to have a purpose. My goal is very simple. If I can convert one of you,
there’s probably 400, 500 people here. If I can convert one of you to follow
your belief and have the guts to follow your belief, I’ll have,
I’ll think of the hour as well spent. Right? So, I would say,
what am I trying to do and why? I don’t speak, because somebody you know,
will write nice things about it. I, I always sort of have a purpose,
but I have a belief system. And most people,
even successful companies, and I have big beef with Fortune 500
CEOs I can talk about, there’s very little leadership there don’t have an internal
compass of what they believe in. Its what do others expect? You know when I graduated,
I went into entrepreneurship. Nobody went into entrepreneurship
out of the business school. And people said why wouldn’t you work for
Goldman or McKenzie. And I said why would you. I, I couldn’t fathom why you
would wanna do that job. Alright? I still can’t, by the way. For those of you going to those places,
and I’m sure there’s plenty, I’m probably
not the right person to talk to you. I frankly don’t even care to talk to you. All of you others. [LAUGH]
>>All right.>>I think there’s something wrong
with anybody who fundamentally wants to go work for
one of the consultants or the investment banks today and
there’s probably.>>[LAUGH]
>>That, this, they don’t understand how the world
is going to work in the future. But my point again is,
have a belief system. Follow that compass. And I’m overstating it a bit, so there may
be some hope for those of you going there. But it’s a li,
only a little bit of an exaggeration. Let me go back to this
issue of Fortune 500 CEOs. I’ve talked to many over the years. If a New York Times
writer writes an article, they want to change their strategy,
they wanna respond. How silly is that, that some English
major who’s never had a business job can determine the strategy
of a Fortune 500 company? Why?
Because they care about what’s written, not what their belief system is. Do you know what Elon Musk
would say to that writer? Go get a real job. All right. What Jeff Bezos would say? That’s leadership. Having a belief system. Knowing what’s driving
you to do what you do. Not you’re fitting in to
do career enhancement. Or, making it look good to somebody else. Whether it’s to your friends, or
to your boss, or to shareholders. And frankly, you look at all the companies
that are languishing in the Valley, the older companies,
they generally don’t have a belief system. They’re generally trying to meet some
quarterly target, without saying, here’s how we will be different and
here’s how we’ll do it. Apple did languish for 10,
15 years, and then Steve Jobs came in with a point of view, and created
the most valuable company in the world. He did irrational things,
if you go back to January of 2007, January 1, everybody was saying nobody
wants a phone without a keyboard. Nobody wants a phone that costs 699. I can go on with the litany. First of all,
English majors writing articles, I have this beef against English majors. [LAUGH]
>>Not all English majors are bad, but the majority of them at Stanford
are undirected and don’t have a goal or a purpose.>>[LAUGH]
>>Sorry. And,and that’s not to say among them
there isn’t 20% that are really good. They just didn’t get the right guidance
and ended up in the wrong place.>>[LAUGH]
>>I like proper school education. Anyway, sorry. Back to you.>>No, absolutely.>>[LAUGH]
>>This is, this actually is an interesting
>>I make up better questions than usually>>[LAUGH]>>[LAUGH] That’s a challenge for you guys. #GSVBFTT. But I want to ask you about this,
you are known for being for the lack of a better word somewhat blunt. [LAUGH]
But your website says we prefer brutal
honesty to hypocritical politeness. What are the tradeoffs in doing this?>>Well there’s lots of tradeoffs but. I’m, I’m again very clear. You know it started off
earlier in my life. I was very successful, even before
I started Sun, I started a company like Daisy that made me more money, which
was only a million dollars back then, or little more than that
than my dad had made in the, in his career cumulatively, so
I was in a whole different place. And I said, the one thing I’ll do is
not do what others want me do, or be polite,
which generally means dishonest. There’s a great book by Sam Harris, who’s a professor over on the other side,
about lying. I recommend everybody read
Sam Harris’ book on lying, and why we all lie too much and too often. We put this sort of slogan,
I prefer brutal honesty to hypocritical politeness, on our website,
because it’s a real disservice to people. You don’t have to be
offensive to be honest.>>Hm.>>When I don’t like somebody,
I can get offensive, too. But generally you can be constructive and
very honest. And I prefer that brutal honesty,
because it serves a purpose. The receiver can do something about it,
if it’s a constructive criticism. If you get po, hypocritical politeness,
you might lose a lot. So, again,
it’s about having enough confidence to say the other person will eventually
appreciate it, and that loc, local goods-slogan came after I
was working on a company with another major rental firm, and
I didn’t believe their plan would work. They had $45,
$50 million in their bank account, so everybody was comfortable,
too comfortable, in my view. I talk to the founders
why it wouldn’t work. What my concerns were. The other VCs agreed with me in the board
meeting, said all these polite things. You know, so 40 engineers wasted three or
four years of their life because nobody was willing to tell them the honest
truth about what they really thought. Right and I swore I would never
let anybody waste their life. At least give them the best advice I had
to give and tell them I may be wrong, but I’m not gonna say something I
don’t believe in, I just won’t. In, and that’s extremely
valuable to the other thing. But to be honest, look, there
are situations you, it offends people, and I offend people often, but it helps
them if they’re really introspective.>>Hm.>>Right? I just had a candidate from Howard
Business School come in and interview for a job and I,
half an hour into the meeting I said, you know, you’re not a match for us. Here’s what I would do, and
I spent the next half hour. I said, I literally said to her, if I’m
gonna waste the next half hour of my life talking to you, I’m gonna give you my
best advice on what to do about your career,
>>Hm.>>which I did. She didn’t love it. She sent me a nice note a week later. But its very valuable. But the real fact,
the honest truth about why I like that is, once I was in a position
I didn’t need a job. Nobody could fire me. I’ve actually never worked for anybody,
so it’s actually sort of nice. I felt it was a indulgence or
a luxury I could enjoy. Some people, if they make, get that
financial freedom might buy a yacht. I bought myself the freedom of brutal
honesty, and it’s an indulgence. I get to do things others may
not be in a position to do. There is a downside for others, but
I think generally constructive honesty and constructive criticism than hypocritical
politeness will serve other people well. That founder, by the way, in that company
called me four years later after, after this company, this company got
sold for $3 million four, three and a half, four years later. Sad story. And he called me a year after that. He said, I only wanna work for you on my next venture because
I wish somebody had told me.>>You mentioned, you talked briefly about
venture capital as it stands now earlier. I just wanna come back to that. Specifically, how does it compare to 1982,
when you were starting Sun Microsystems, and what are the major
differences you see?>>It’s a lot more popular now. It’s a lot more accepted. It’s a lot more accepted to do startups. So for those of you who are so inclined,
it’s much easier to take that route. It wasn’t back then, so the risk of going
the entrepreneurial route was much higher. If you went entrepreneurial and it didn’t work out you couldn’t
get a job at GE, right? Much harder. Today, if you’ve done a startup, GE would
love to have you, even if it failed. In fact, would prefer you over
somebody who spent two years at GE. Not 100% true. But generally,
it’s the learning experience of a startup, whether it’s successful or unsuccessful,
is recognized as extremely valuable. And the cultural training of that is
something everybody’s striving for. I’m amazed at the people who
come through Silicon Valley. It feels like a tourist stop,
like Fisherman’s Wharf used to be. Every Fortune 500 CEO coming here, holding board meetings here because
they wanna learn the culture. And, and I think that becomes
a real career enhancement for those of you who do that. Now, I’m not a big fan
of planning careers. I’m much more about driving for
the things you wanna do and go do them.>>And, and that’s about entrepreneurship. What about venture capital? I mean, for instance, you very famously
said in a TechCrunch interview, 95% venture capitalists add no value,
and 70% add negative value.>>[LAUGH]
>>All of my venture capital friends love that statement.>>Yes, they do. [LAUGH]
>>But I, I, I tell them that, you know, there was a major firm. I called somebody there and said,
this guy’s destroying this company, right?>>Wow.>>It happens all the time. One, it, look venture capital’s
become a big business. It didn’t use to be back then. It was a specialty art form. There was a few firms, and most of them. Sequoia was started with Don Valentine. If you know Don, he was an operator. Kleiner was started by Tom Perkins and
Eugene Kleiner. Tom ran a division of HP, and
before that, he was a technologist. These guys, and, and
I’m not one for looking back and being romantic about things,
but this issue is important. These guys earned the right to advise an entrepreneur. That means they’d gone through
the battles, they, they had the experience when a unique situation came up and
an entrepreneur wanted advice. They actually had been through
the firing line to viscerally understand how to give them advice. Most VCs have not earned the right
to advise an entrepreneur, yet they feel free to in their ignorance. And I believe you should have
gone through a startup or at least some significant experiences, and
there are good exceptions to this rule, to really advise entrepreneurs
on how to build a company. And most VCs haven’t done that,
so they give stupid advice. You know,
if you got out of business school and joined a VC firm and grew up and eventually became a partner, you haven’t
learned what it’s like to be in a startup. So in our firm, we have a rule. You can join, you join for
three to four years. Then you’ll have to leave, actually work
in a startup, before you come back, and actually can get, I’ll give you the
responsibility to advise entrepreneurs. People get frustrated because their peers
in other venture firms are sitting on boards and advising entrepreneurs. But, you know,
that’s exercising authority as opposed to exercising influence because you
have credibility with entrepreneurs. Most of the time I don’t go on boards. I just advise entrepreneurs. And frankly,
being on a board is irrelevant.>>On that topic you have a really
unique strategy among VCs. You’ve said,
I’m only interested in technologies that have a 90% chance of failure, but if they
do succeed would change the infrastructure of society in a radical way. How did you come to adopt
this particular strategy?>>Well, so, that’s not exactly accurate because
we don’t mind low-risk technologies,. We invest in that, too. But what I wanna say is, venture capital, if you think about it, isn’t,
is not an IRR business. You, you,
you take any of the big successes. Google, Facebook, Twitter. You can’t predict them. You know, a camera like GoPro,
can you predict the, the market cap? You can’t. And you can do spreadsheets, so we don’t
allow any IRR calculations in our firm. Nobody does them, nobody looks at them. In making investments,
we never calculate an IRR. Because calculating an IRR, in my view, is creating the illusion of knowing,
which big companies are very good at. You tweak some assumption. I did enough business plans to know I can
make the business plan do whatever I want on the spreadsheet. You know, reality is different. I don’t even think you can plan startups,
so business plans are largely irrelevant other than in surfacing the key issues
the entrepreneur is thinking about. How thorough is their thinking? What’s the quality of their thinking? That’s the only thing I
use a business plan for. Then what are you doing? You’re really doing option value
investing, if you want a financial term. If you lose,
you lose one time with your money. If you win, you win ten times your money. Your downside is limited
to your investment. So whenever we make an investment,
I assume we lost it, and then there’s only upside.>>[LAUGH]
>>Right? As soon as you write it off in your mind,
there’s only upside. So that’s how I view the world. And then you try and take the higher risk. And there’s VCs who won’t invest
with us because they feel like we, we take too much risk, which is fine. There’s room for every style of VC firm. Ours is different. It’s about taking higher risks and
higher upside. 90% chance of failure is not a problem. If there’s a ten percent chance
of 100 times your money. If it’s the only thing that worked,
then you’re in pretty good shape. And, and
that’s not the only good strategy. Private equity does very well
running spreadsheets and that, I just have no
interest in spreadsheets. So, and we’re not good at it.>>Hm.
>>So we know what we do. What’s bad is when people who
come from that word want to do this kind of investing.>>Yeah.
>>It can’t be a mismatch of your personality with
the investing type. But all those are good scenarios and
some of them are even better scenarios, for our art than what we do.>>We, sorry. You, you mentioned in your, you mentioned right now about getting
other VC students to invest with you. And throughout your investing period you
had a strong streak of going against conventional wisdom. NexGen, Juniper I’m curious. How do you get others to
buy into your convictions?>>Sometimes they do after the fact,
sometimes they don’t. Sometimes they actually
don’t know any better. So they’re confused, which is good. [NOISE] A, all those happen. Look, there’s lots of really good. Receives a lot, right? But there’s order of magnitude
more bad we sees around. It’s, so there’s probably half a dozen
people I respect in the VC business and probably the vast majority I don’t
know personally so I won’t judge them. But of all the people I know in the VC
busni, 90% really add no value, and I truly belive 70% of them reduce
the potential of a company.>>I could, I could keep asking
you questions on investing, but I really wanna-
>>But, but, here’s the thing, right? 90% chance of failure. You have to have the courage to fail them, because most likely you’re going to,
to get that option at a very large play. Well, and, and
that’s a pretty clear segment of the venture capital business or
the investing business. It’s not every segment. Capital preservation is important in other
segments it’s just boring to me, it’s much more exiting to be on a roller coaster
where the highs a high and a lows a low. So risk taking is
absolutely essential now. As career advice to all of you, most, you can make money and good status,
and all that in regular big companies. There’s very little really interesting
stuff you can do in big companies. It comes shockingly,
it’s shocking to people, but who invented, reinvented retail? It wasn’t Wal-Mart. It was Amazon. Who reinvented media it wasn’t NBC. It was YouTube. Who reinvented space it wasn’t Lockheed. It was Space X. I was hard pressed to think of
one thing that had come out of a large company in the last 20,
30 years. That was materially
changing the landscape. And the reason’s very simple, and
this is all interesting things have, eh, happened at the edges of the system. They don’t happen in the solid core. And, all that you have to do where things are fuzzy,
unclear, uncertain. If there’s a market forecast,
it’s not at the edge of the system. If some analyst has a report. It’s not what’s ex,
going into that area, right? I’ve a whole thing about
analysts we can get there.>>[LAUGHTER]
>>Let’s actually talk about it.>>Okay.
So ask me after I finish this.>>Sure.>>Talk. In the edges where things are uncertain
is they’re old evolutionists and there interesting changes in business or
society happen. And unless you’re there and
learning fast from being there and not being too out of it to believe you
know what’s going to happen you’re not gonna be in that learning edge of
the wave, where new things are happening. And as career advice, I say. And that’s where failure happens often. You want failure to be small,
and success to be very large, which is the characteristic
of option value. You lose your option price, but
you get option value if it’s successful. That all happens at the edge. In automotive, I, as, th,th,
there was a CEO, in fact, I’ve had three CEOs from the ten
largest auto companies come by in the last six months and I said I wouldn’t
worry about building a better car. Almost certainly,
ten years from now, a Volkswagen or a Toyota will be a financing entity,
not a car-making entity. There will not be the notion
of marketing to consumers. The auto industry as we know
it I think will disappear. Disappearing in the sense of IBM
mainframes are still around, they’re still a business, they’re relatively static,
they’re filling an old need. But almost certainly, the number of
cards produced ten years from now will be less than half of what is produced
today for sale to consumers.>>Hm.>>I, now, long, we don’t have enough
time to go into why I believe that. Almost certainly, and
I’m serious about this. I gave a talk at the Stanford med school,
and I said, if I wanted to be a good doctor in 15,
20 years, I wouldn’t go to the med school. If I wanted to be a good doctor,
I would go to the math department. Almost certainly, every single thing they’re learning about
medicine will be obsolete in 15 years. So, you can join Medtronic, or
DE Medical, and do incremental things, or you can try to learn that the edges, where
your probability of failure is much high. But the consequences of success
are really consequential, and most people in their life,
in their business, reduce risk to the point where the probability
of success goes higher, but the consequences of success
are inconsequential, as opposed to reducing the probability
of success and increasing the consequences of success.which
is sort of my life to start with. Trust me, it’s a lot more fun
then spending 30 years and Goldman and I like Goldman.>>[LAUGH] That’s a fascinating world
view, but I really want to get a question.>>So let me go back to.>>Okay.
>>[LAUGH] [APPLAUSE]>>I, I, I just have seen the tide. But you did ask me to talk about
>>The analysts and the experts.>>Yeah.
The experts. So Professor Chetlark when he was at
Berkley did research on expert opinion. All the analysts you read all
the Mackenzie reports, and by the way, Bain and PCG no different. And he followed all of their forecasts for
20 years, 28,000 individual
forecasts from 250 experts. Where when the forecast was made, he classified what would be a success,
what would be a failure, And the book is called “Expert Political
Judgement.” So, all these great studies, the 10-year studies McKenzie did for
millions of dollars for AT&T on what would happen to the cell
phone business, that’s a fun story. Across 28,000 individual forecast
in 84,000 possible scenarios. The average accuracy of the best experts,
whether it was Henry Kissinger, Tom Friedman, McKenzie, your favorite,
eh, favorite economic forecaster. The average accuracy,
was about the same, to use his words, as dart throwing monkeys. So if you want to run your
life on these forecast and create an illusion of knowing. Great, go do it! You will follow a path that others
will reinforce because you can give them a data quest study or
a Bain forecast. Or you can discover the edges where
things are happening and changing. Know that you don’t know,
and really change the world. Now, again bringing back to leadership,
it’s about having a point of view. It’s about having an internal compass. This is a great point in your life. To actually decide which one of those. Do you have a belief system? Or you gonna do what
others tell you to do? Whether it’s written up
in the New York Times, which, which somebody wrote up who
doesn’t understand the context. Whether it’s the McKenzie report or
a G-Forecast, or a Goldman analyst, or
you gonna do what you believe in? And unfortunately,
very few of you will do that. I hope I can work some of you
to believing in yourself. And the good news is,
I actually believe five percent of the people is all that’s needed to be even
remotely innovative to change society. I once looked at all social changes,
not just business, and I looked at a decade and I said for
people born between 1940 and 1950 or 1950 of all the people
born on this planet. You can take the ten ma, 100 major areas. And define, could you find 100
people in each of those areas, from that decade, that generation,
who affected change? It didn’t matter whether
it was music,arts, research in social sciences,
technology invention, business. You can’t find a hundred areas and
you cannot find a hundred people that stand out in
each of these areas in any given decade. So, less than 10,000 people
born this decade will influence All of what society does think, happen. I’d like to say you should try and
be one of those people, and none of those people will
follow any analyst’s forecast. They will have an internal compass, they’ll have self-confidence in a belief
system, and they’ll make change happen. I’m very passionate about this,
cuz frankly, it only takes a few people to change the
direction of any industry or social trend.>>You know, I think this might be a good
time to open up the floor to questions from the audience. So we have Caroline and
Rai on either side with mics. Please keep your hands raised so
that one of them can spot you. You can also tweet your questions
using #gsbvftt, and Michelle here will ask your question, actually lets
start with a question from twitter.>>And I want to apologize I have
to leave soon after this, but my email address is [email protected]
if we don’t get to your question, please feel free to send it.>>Thank you Vino-
>>And I’ll spend as much time answering it as, as much time as you spent
thoughtfully asking the question. [LAUGH]
That, that’s my rule on email. I try and judge how much, how thoughtful
was somebody in sending the email. Yes, sorry.>>Alright, there’s a lot of very
thoughtful questions on Twitter regarding your belief system. Can you talk about what exactly
is your core belief system, and how do you foster that in your team and
your company?>>You know, so I decided very early I
wanted to work on interesting things. Is not well known but I started the first
program, programming class at NEIIT. In 1971, we formed a hobby club of
four people to learn programming, and that was the first instance I know
of a programming class at NEIIT. A few years later, I got interested
in biomedical engineering, and I was 16 when I started the programming
club at IIT Delhi, a few years later we started the biomedical
engineering program, which was, we just convinced one professor to work with us,
and there was three or four of us, and so I had this habit of saying, what do I
want to do and how to make it happen. But the core belief system I have is,
I wanna work on interesting things. I don’t wanna get bored. And it applies to what I’m doing today. What I’ve learned since is,
it’s nice to do that, but it’s even more rewarding to do interesting
things that have a great impact. And so I measure impact a lot. We are probably the only VC
firm that in the first, for the first slide deck
a fundraising slide deck we said we care about our ambition
which is R&R but care as much but more about our ambition, our mission
which is to make a positive change. And, I’ve told my LPs if you get a lower
rate of return but higher impact, we’ll probably pick that, because I’m much
more interested in that than feeding some pension fund a slightly higher rate
of return as long as I cross a bar. It’s very clear to me. So, it was cool stuff and
interesting stuff, early I didn’t have
perspective when I was in 20s. And over time I said, it’s much more fun
to work on things that make a difference. And so I only do that. We, we had an investment and somebody
will tweet this and I’ll get in trouble. We are looking at investment in a company
called T Spraying which is doing extremely well. And the partner who was doing that,
and I said you know, you want to invest in T Spraying or
t-shirts, great. Don’t expect me to spend any time. I’m not interested in t-shirts. I’d rather work on a healthcare solution,
and so, it’s not, again, I want to emphasize
this is a luxury I’ve earned. So, all of you don’t have that luxury,
if you’re not in the same place, and I recognize when other people
aren’t in the same place. I also never cared what people thought, so I had that luxury
very early on in my life. Mostly through my attitude, which was
much more belligerent when I was young. But now I can honestly say, we built
a new building a few years ago and I said, you know, as long as health
permits, I’ve enjoyed this so much and the area I’m working on keeps
changing every few years because the nature of venture capital and
technology. I’m gonna do this for
the rest of my life but only do things that actually
make a positive difference. But then also, anytime you make
a difference, you make money and I think when you make money as a consequence of
trying to do really interesting companies, you make much more of an impact
then if you do it as a transaction, buy/sell kind of thing. In fact, if I get a plan,
business plan that talks about exit in the first couple of pages,
I almost never read the rest of it.>>It’s a good tip, right?>>Can you hear me?
Yeah? So I’m Melina and I actually work for
a healthcare start up. I have a pointed question about you. I’m very impressed by
the confidence you exhibit and obviously you have reasons
to be that confident.>>Some people call it arrogance.>>[LAUGH]
>>My question is did you, when you were a kid, did you get
support from your family that made you as confident as you are right now?>>You know, e, e,
first it’s hard to remember. I always did my thing. I always did things most kids didn’t do. And my parents always sort of, I guess support is
probably the right word. Indian families are very different, you never did things your parents really
oppose, but, I tended to do some of that. [LAUGH] but I always had great dialog with
my parents, and they actually sort of, accepted me very early doing,
going out of the bounds. For those of you interested in my attitude
and those of you who may have kids, I was asked to give a talk at Harker
School here in, you know, in Saratoga. So give a talk to the high school kids,
and I did a presentation. My first slide was something like why
you should only color outside the lines.>>[LAUGH]
>>My second slide was about why you should disregard your teachers.>>[LAUGH]
>>My third one was why you should disobey parents.>>[LAUGH]
>>Eh, and, and yeah, it was sort of funny and the kids loved it, but
I’m dead serious about it. I am dead serious about it. I actually think,
inculcating an attitude of exploration, not confirmation to a bound set,
a bound set by others, is what creates this internal compass and
belief system and confidence in yourself. Again I say,
90% of you will do what’s expected. You know, after this you’ll be
motivated and then go back and say, oh, that Goldman job, it pays more.>>Okay.>>Hi, I’m Neil MBA1,
thanks for your speech. I just on the end of this thing that you
mentioned, there’s the VC field now, as compared to in the past, has become a lot more crowded and
there’s a talk of tech bubble here. In your opinion,
are we in the middle of a bubble? And if so,
when do you foresee it bursting? Thanks.>>I don’t,
I know that I don’t know the answer. I also know anybody who tells you they
know the answer is probably stupid. [LAUGH]. [LAUGH].>>So yeah, thanks, thanks for
your talk, Pablo Fuentes, MBA10. So I think your brand of swashbuckling is
particularly effective if you show some vulnerability. So I’m gonna be your buddy and allow you
to tell us a story about a time when you got crushed by somebody’s brutal
honesty and what you did with that.>>[APPLAUSE]
So, look it would take an hour to
talk about all my mistakes. I actually let me put it this way. In the last 15 years, there’s only once
in my life I’ve called somebody and say I’d like to speak at this conference. And that wasn’t a popular conference. It was a small thing in a hotel
room in San Francisco and was called FailureCon where
everybody who had co, failed came. And I wanted to speak to
this issue of failure. There are so many s, stupid things. You know, the iPad is so popular. We tried to do it, probably one of
my large mistakes, in the late 80s. And I could go into details,
and I, I’ll cut it short. What I would say is I’m never
embarrassed about my failures. And so if you search in the web for
my failures, you’ll find lots of them and you’ll find me talking about them. And it’s important because,
given my philosophy, where I screw up doesn’t matter,
because it’s a long list. In fact,
it’s a longer list than my successes. But like I started with, nobody remembers the data dump here,
everybody remembers Sun. Right? The number of venture companies
where I made stupid mistakes. I’ll, I’ll tell you one of my,
big failures. So if you go back to Sun. 1980s. Sun’s logo, or, on, on, le, motto under the logo
was the network is the computer. And these couple of people started
this software program that did routing of IP packets of network traffic. That happen to be the beginning of Cisco. Now, when you say the network
is the computer and make these arrogant marketing lines, and you
forget that routing is the key element. And Cisco was born as an application
on Sun, and we didn’t see it. And I said to myself, duh, how stupid was
I not to see it when it was happening? Even when I saw the application! A router was an application
on a sun machine, we missed the largest
opportunity Sun put out. I can find 100 such examples,
the point is, try and fail but don’t fail to try. My, a couple of other favorite
quotes along those lines, since we’re coming to the end of our time. Robert F.
Kennedy said, only those who fail greatly
can succeed greatly. The classic example of that is Elon Musk. He said forget this bullshit
about supplying batteries to GM. They’re just too slow
to make change happen. You know I was talking about retailing
Amazon not Walmart, YouTube not NBC. Think about GM or Tesla. GM spent way more money than Tesla did. Space, NASA and Lockheed spent
way more money than SpaceX did. I can go on and on, every major change. So failure, try and fail,
but don’t fail to try. Nassim Taleb and his book Antifragile
which I recommend everybody read if they are setting off on a career as a personal
philosophy, mine happens to coincide, and I’m not talking about Black Swan,
but his book called Antifragile. I always love ending with a good rec,
book recommendation. I think that’s important, so. I’m just not embarrassed
about my stupid mistakes. I mean, I think that’s the difference.>>[INAUDIBLE]
>>I’d know if I answered your question.>>[INAUDIBLE]
>>When did I get crushed?>>[INAUDIBLE]
>>By brutal honesty. I mean, I’ve offended plenty of people. And that, so I won’t go into
the details because the public company, two public companies involved but,
I was on a, on a panel with the CEO of this public company and I basically
told them how stupid they were and then there was payback in a indirect way and
that really hurt this other company and it you know, literally killed,
almost killed the company. Unfortunately because they’re public
companies I won’t go into details. So that’s an example where
brutal honesty really hurt me. I can think of lots of, look, there’s
plenty of people in the VC business that don’t like me because I tell them
they, they, they’re sort of worthless. Eh, eh, I do! But again it’s an indulgence on my part. The really good people
I don’t say that to. If I don’t know somebody enough
I won’t say to that to them. But if I do know for
sure I do make sure I tell them. More importantly, I tell [INAUDIBLE] knows
what I think and they often tell the VC. But it’s part of life.>>Now I want to make sure we
have time for one more question.>>Mm-hm.>>Actually,
a quick announcement before that. Friends of Ronid from the class of 2010
are welcome to join his family backstage after the event ends to share stories and
reminisce. So, this questions has sort of sort
of a view from the top tradition. And every applicant to Stanford GSB is
asked this question on their application. However, you were not asked
this question in 1978, because this question didn’t exist
in 1978, it started in 2000s. So here’s your chance to
answer this question, what matters most to you and why?>>You know I think it sort of and,
and I won’t phrase this in, in a do gooder kind of way and
I don’t mean it that way. I just find it’s cool to
disrupt things for the better. And so when I say impact I sort of feel like I’m being
a troll on various industries. It’s a luxury I’ve earned to, because
I don’t need to pay my mortgage and so, I like taking on new things. You know, I, it’s sort of like
now people are mad at me for saying we don’t need doctors. I actually don’t believe we do. So but we need, a different kind of
doctor to do a different kind of thing. And I wouldn’t go to Stanford Med
school to get the best doctors. I’d go to UCLA film school because the
human element of care is important, and acting becomes important. And that’s where most of our doctors
will come from in 15 years for the human element of care. And people hate it, doctors hate
it when I say to get the most, most of the human element of care
you need the most humane humans and those aren’t the high-IQ people who
got into Stanford Med School, reality. But what I would say is knowing I can make a difference in industries where
things are positive is very rewarding. And let me end on the note that
I actually like working on things that my four kids would be
proud of me working on, right. And there’s this question that
all of you will face of work, life balance so let me end on that note. Working on cool things excites me,
keeps me motivated, I like to say, you you grow old when you retire, not you
re, you don’t retire when you grow old. And as long as you are stimulated and
excited and whatever your passion is, and it can be what I do,
it could be I want to train a whale. I find that a really hard task. It’s a significant challenge by itself. Maybe it’s not hugely impactful for
society. But I actually love that example of,
if I got passionate about that and did that, and
it’s a really hard thing to do. It’d be exciting to go pursue it. So I like hard challenges, I like
difficult things, I like working against the odds and that brings out
my competitive spirit and now I happen to constrain it to areas where
I think I can have a positive impact. But not so much in the do-gooder thing,
it’s a luxury I can indulge in. It makes my kids feel better. So let me end there. Through all of the 90s when my
kids were young, I had one rule. This 15 minute thing,
managing my time came from the following. I realized it was easy for
all of us to say things and then, and mean them and
not stay true to them. The most important? Family. Everybody says the right words,
they don’t live by them. So, what I decided I would
do is get a monthly report of every category of time I spent time on. It could be working with entrepreneurs,
evaluating new companies, being polite talking to journalists,
being polite because somebody said, here my son wants to talk,
have a conversation. I classified my time into 20 categories,
one of the most critical lines from that was the number of times
I had dinner with my kids at home. And I set an impossible goal of 25 times,
a month. And, it took me a year or
so, but eventually I met it. But more importantly, every month I had
to report on whether I did or didn’t. I do believe work,
life balance is possible. You just have to be extremely
disciplined about it. I no longer went to the pub,
right, or the. I know no longer did
baseball games with friends, I only did it with my kids or son. I, I decided what my
priorities were explicitly and then measured it to meet the requirements. I highly recommend you come up with
your own priorities and measure them. Thank you all very much.>>Thank you Rao thank you
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Ngozi Okonjo-Iweala: How to help Africa? Do business there


Thank you very much, Chris. Everybody who came up here said they were scared. I don’t know if I’m scared, but this is my first time of addressing an audience like this. And I don’t have any smart technology for you to look at. There are no slides, so you’ll just have to be content with me. (Laughter) What I want to do this morning is share with you a couple of stories and talk about a different Africa. Already this morning there were some allusions to the Africa that you hear about all the time: the Africa of HIV/AIDS, the Africa of malaria, the Africa of poverty, the Africa of conflict, and the Africa of disasters. While it is true that those things are going on, there’s an Africa that you don’t hear about very much. And sometimes I’m puzzled, and I ask myself why. This is the Africa that is changing, that Chris alluded to. This is the Africa of opportunity. This is the Africa where people want to take charge of their own futures and their own destinies. And this is the Africa where people are looking for partnerships to do this. That’s what I want to talk about today. And I want to start by telling you a story about that change in Africa. On 15th of September 2005, Mr. Diepreye Alamieyeseigha, a governor of one of the oil-rich states of Nigeria, was arrested by the London Metropolitan Police on a visit to London. He was arrested because there were transfers of eight million dollars that went into some dormant accounts that belonged to him and his family. This arrest occurred because there was cooperation between the London Metropolitan Police and the Economic and Financial Crimes Commission of Nigeria — led by one of our most able and courageous people: Mr. Nuhu Ribadu. Alamieyeseigha was arraigned in London. Due to some slip-ups, he managed to escape dressed as a woman and ran from London back to Nigeria where, according to our constitution, those in office as governors, president — as in many countries — have immunity and cannot be prosecuted. But what happened: people were so outraged by this behavior that it was possible for his state legislature to impeach him and get him out of office. Today, Alams — as we call him for short — is in jail. This is a story about the fact that people in Africa are no longer willing to tolerate corruption from their leaders. This is a story about the fact that people want their resources managed properly for their good, and not taken out to places where they’ll benefit just a few of the elite. And therefore, when you hear about the corrupt Africa — corruption all the time — I want you to know that the people and the governments are trying hard to fight this in some of the countries, and that some successes are emerging. Does it mean the problem is over? The answer is no. There’s still a long way to go, but that there’s a will there. And that successes are being chalked up on this very important fight. So when you hear about corruption, don’t just feel that nothing is being done about this — that you can’t operate in any African country because of the overwhelming corruption. That is not the case. There’s a will to fight, and in many countries, that fight is ongoing and is being won. In others, like mine, where there has been a long history of dictatorship in Nigeria, the fight is ongoing and we have a long way to go. But the truth of the matter is that this is going on. The results are showing: independent monitoring by the World Bank and other organizations show that in many instances the trend is downwards in terms of corruption, and governance is improving. A study by the Economic Commission for Africa showed a clear trend upwards in governance in 28 African countries. And let me say just one more thing before I leave this area of governance. That is that people talk about corruption, corruption. All the time when they talk about it you immediately think about Africa. That’s the image: African countries. But let me say this: if Alams was able to export eight million dollars into an account in London — if the other people who had taken money, estimated at 20 to 40 billion now of developing countries’ monies sitting abroad in the developed countries — if they’re able to do this, what is that? Is that not corruption? In this country, if you receive stolen goods, are you not prosecuted? So when we talk about this kind of corruption, let us also think about what is happening on the other side of the globe — where the money’s going and what can be done to stop it. I’m working on an initiative now, along with the World Bank, on asset recovery, trying to do what we can to get the monies that have been taken abroad — developing countries’ moneys — to get that sent back. Because if we can get the 20 billion dollars sitting out there back, it may be far more for some of these countries than all the aid that is being put together. (Applause) The second thing I want to talk about is the will for reform. Africans, after — they’re tired, we’re tired of being the subject of everybody’s charity and care. We are grateful, but we know that we can take charge of our own destinies if we have the will to reform. And what is happening in many African countries now is a realization that no one can do it but us. We have to do it. We can invite partners who can support us, but we have to start. We have to reform our economies, change our leadership, become more democratic, be more open to change and to information. And this is what we started to do in one of the largest countries on the continent, Nigeria. In fact, if you’re not in Nigeria, you’re not in Africa. I want to tell you that. (Laughter) One in four sub-Saharan Africans is Nigerian, and it has 140 million dynamic people — chaotic people — but very interesting people. You’ll never be bored. (Laughter) What we started to do was to realize that we had to take charge and reform ourselves. And with the support of a leader who was willing, at the time, to do the reforms, we put forward a comprehensive reform program, which we developed ourselves. Not the International Monetary Fund. Not the World Bank, where I worked for 21 years and rose to be a vice president. No one can do it for you. You have to do it for yourself. We put together a program that would, one: get the state out of businesses it had nothing — it had no business being in. The state should not be in the business of producing goods and services because it’s inefficient and incompetent. So we decided to privatize many of our enterprises. (Applause) We — as a result, we decided to liberalize many of our markets. Can you believe that prior to this reform — which started at the end of 2003, when I left Washington to go and take up the post of Finance Minister — we had a telecommunications company that was only able to develop 4,500 landlines in its entire 30-year history? (Laughter) Having a telephone in my country was a huge luxury. You couldn’t get it. You had to bribe. You had to do everything to get your phone. When President Obasanjo supported and launched the liberalization of the telecommunications sector, we went from 4,500 landlines to 32 million GSM lines, and counting. Nigeria’s telecoms market is the second-fastest growing in the world, after China. We are getting investments of about a billion dollars a year in telecoms. And nobody knows, except a few smart people. (Laughter) The smartest one, first to come in, was the MTN company of South Africa. And in the three years that I was Finance Minister, they made an average of 360 million dollars profit per year. 360 million in a market — in a country that is a poor country, with an average per capita income just under 500 dollars per capita. So the market is there. When they kept this under wraps, but soon others got to know. Nigerians themselves began to develop some wireless telecommunications companies, and three or four others have come in. But there’s a huge market out there, and people don’t know about it, or they don’t want to know. So privatization is one of the things we’ve done. The other thing we’ve also done is to manage our finances better. Because nobody’s going to help you and support you if you’re not managing your own finances well. And Nigeria, with the oil sector, had the reputation of being corrupt and not managing its own public finances well. So what did we try to do? We introduced a fiscal rule that de-linked our budget from the oil price. Before we used to just budget on whatever oil we bring in, because oil is the biggest, most revenue-earning sector in the economy: 70 percent of our revenues come from oil. We de-linked that, and once we did it, we began to budget at a price slightly lower than the oil price and save whatever was above that price. We didn’t know we could pull it off; it was very controversial. But what it immediately did was that the volatility that had been present in terms of our economic development — where, even if oil prices were high, we would grow very fast. When they crashed, we crashed. And we could hardly even pay anything, any salaries, in the economy. That smoothened out. We were able to save, just before I left, 27 billion dollars. Whereas — and this went to our reserves — when I arrived in 2003, we had seven billion dollars in reserves. By the time I left, we had gone up to almost 30 billion dollars. And as we speak now, we have about 40 billion dollars in reserves due to proper management of our finances. And that shores up our economy, makes it stable. Our exchange rate that used to fluctuate all the time is now fairly stable and being managed so that business people have a predictability of prices in the economy. We brought inflation down from 28 percent to about 11 percent. And we had GDP grow from an average of 2.3 percent the previous decade to about 6.5 percent now. So all the changes and reforms we were able to make have shown up in results that are measurable in the economy. And what is more important, because we want to get away from oil and diversify — and there are so many opportunities in this one big country, as in many countries in Africa — what was remarkable is that much of this growth came not from the oil sector alone, but from non-oil. Agriculture grew at better than eight percent. As telecoms sector grew, housing and construction, and I could go on and on. And this is to illustrate to you that once you get the macro-economy straightened out, the opportunities in various other sectors are enormous. We have opportunities in agriculture, like I said. We have opportunities in solid minerals. We have a lot of minerals that no one has even invested in or explored. And we realized that without the proper legislation to make that possible, that wouldn’t happen. So we’ve now got a mining code that is comparable with some of the best in the world. We have opportunities in housing and real estate. There was nothing in a country of 140 million people — no shopping malls as you know them here. This was an investment opportunity for someone that excited the imagination of people. And now, we have a situation in which the businesses in this mall are doing four times the turnover that they had projected. So, huge things in construction, real estate, mortgage markets. Financial services: we had 89 banks. Too many not doing their real business. We consolidated them from 89 to 25 banks by requiring that they increase their capital — share capital. And it went from about 25 million dollars to 150 million dollars. The banks — these banks are now consolidated, and that strengthening of the banking system has attracted a lot of investment from outside. Barclays Bank of the U.K. is bringing in 500 million. Standard Chartered has brought in 140 million. And I can go on. Dollars, on and on, into the system. We are doing the same with the insurance sector. So in financial services, a great deal of opportunity. In tourism, in many African countries, a great opportunity. And that’s what many people know East Africa for: the wildlife, the elephants, and so on. But managing the tourism market in a way that can really benefit the people is very important. So what am I trying to say? I’m trying to tell you that there’s a new wave on the continent. A new wave of openness and democratization in which, since 2000, more than two-thirds of African countries have had multi-party democratic elections. Not all of them have been perfect, or will be, but the trend is very clear. I’m trying to tell you that since the past three years, the average rate of growth on the continent has moved from about 2.5 percent to about five percent per annum. This is better than the performance of many OECD countries. So it’s clear that things are changing. Conflicts are down on the continent; from about 12 conflicts a decade ago, we are down to three or four conflicts — one of the most terrible, of course, of which is Darfur. And, you know, you have the neighborhood effect where if something is going on in one part of the continent, it looks like the entire continent is affected. But you should know that this continent is not — is a continent of many countries, not one country. And if we are down to three or four conflicts, it means that there are plenty of opportunities to invest in stable, growing, exciting economies where there’s plenty of opportunity. And I want to just make one point about this investment. The best way to help Africans today is to help them to stand on their own feet. And the best way to do that is by helping create jobs. There’s no issue with fighting malaria and putting money in that and saving children’s lives. That’s not what I’m saying. That is fine. But imagine the impact on a family: if the parents can be employed and make sure that their children go to school, that they can buy the drugs to fight the disease themselves. If we can invest in places where you yourselves make money whilst creating jobs and helping people stand on their own feet, isn’t that a wonderful opportunity? Isn’t that the way to go? And I want to say that some of the best people to invest in on the continent are the women. (Applause) I have a CD here. I’m sorry that I didn’t say anything on time. Otherwise, I would have liked you to have seen this. It says, “Africa: Open for Business.” And this is a video that has actually won an award as the best documentary of the year. Understand that the woman who made it is going to be in Tanzania, where they’re having the session in June. But it shows you Africans, and particularly African women, who against all odds have developed businesses, some of them world-class. One of the women in this video, Adenike Ogunlesi, making children’s clothes — which she started as a hobby and grew into a business. Mixing African materials, such as we have, with materials from elsewhere. So, she’ll make a little pair of dungarees with corduroys, with African material mixed in. Very creative designs, has reached a stage where she even had an order from Wal-Mart. (Laughter) For 10,000 pieces. So that shows you that we have people who are capable of doing. And the women are diligent. They are focused; they work hard. I could go on giving examples: Beatrice Gakuba of Rwanda, who opened up a flower business and is now exporting to the Dutch auction in Amsterdam each morning and is employing 200 other women and men to work with her. However, many of these are starved for capital to expand, because nobody believes outside of our countries that we can do what is necessary. Nobody thinks in terms of a market. Nobody thinks there’s opportunity. But I’m standing here saying that those who miss the boat now, will miss it forever. So if you want to be in Africa, think about investing. Think about the Beatrices, think about the Adenikes of this world, who are doing incredible things, that are bringing them into the global economy, whilst at the same time making sure that their fellow men and women are employed, and that the children in those households get educated because their parents are earning adequate income. So I invite you to explore the opportunities. When you go to Tanzania, listen carefully, because I’m sure you will hear of the various openings that there will be for you to get involved in something that will do good for the continent, for the people and for yourselves. Thank you very much. (Applause)